Episode 31 Transcript

Welcome to episode 31 of the Business in
Morocco podcast.Today we're going to be
talking about the advantages and
opportunities of becoming an auto
entrepreneur in Morocco
but before we get to that Ryan what's
going on this week
hey Ryan good to see you excited for
this episode yeah it's been a good week I launched my course that
I'm running called habits for success
happening on October 5th
so I've you know made a Facebook event
published it on my website and I've
started kind of marketing that and just
putting the word out inviting people to
come got a couple people signed up so
spaces are filling I only have ten spots
so it's still a few weeks away so I was
encouraged by that because I know
planning something and booking
something weeks in advance is a little
bit of a hard sell in this business
climate but some some early
adopters have already jumped in so I'm
excited for that do you have a date set
yeah it's Saturday October 5th and
how is the best way to contact you about
signing up you can find it on my website
maybe we can put it in the show notes yeah or they can send you an email
at...anything Ryan@moroccopodcast.com
or maroctreasure@gmail.com
exactly yeah
good I'm excited are you gonna videotape
it I am yeah I'm gonna get my my camera
guy from Zaaphire Tech he's gonna be there
I need to actually confirm that with him, in case he's listening and yeah we're
gonna get some video so that way I can
use it for marketing future workshops
but also just to share little snippets
for free on YouTube LinkedIn etc what
about you what's new well I think since
we last recorded the podcast quite a few
things have happened
I met with an intermediary who does
distribution of manufactured products
and they work specifically with
retailers here in Morocco including
duty-free the meeting was interesting I
thought I knew something
about retail and distribution and
exports here in Morocco before the
meeting and I realized how little I knew
oh really
yes it is a very complicated and
frustrating process and you have to have
a lot of good relationships and a lot of
knowledge in order to be effective and
what I've come to realize is that having
a direct relationship with duty-free
would be a lot of time and effort and
blood and sweat and tears and if we can
negotiate a deal with this intermediary
their fee would be well worth it
yes so we're reassessing our pricing
structure and our commission structure
to see if we can come up with an
agreement that allows us to sell the
products to this intermediary who
already has a flow a supply chain going
into duty-free so they could just
buy our product put it into their
deliveries and put it into their system
yeah I also learned that barcodes are
this controlled item that you have to
pay for on a monthly basis and every
barcode is unique and is paid for and
even the first letter or the first
number in a barcode signifies a region
or country for example Morocco's number
is six so if you see a barcode that
starts with six most likely it was
manufactured in Morocco Wow he did tell
me something interesting that a lot of
products that he has manufactured are
manufactured in China or overseas they
are imported into Morocco and then they
are exported to duty-free right and I
said I told him a joke I thought it was
kind of funny so let me get this
straight I said to him you manufacture
in China you import to Morocco then you
export to duty-free who then sells the
item to a Chinese tourist who then takes
it back to China exactly he's like who
profits in this deal and we both agreed
it was duty-free
it is kind of funny yeah I did talk to
him about why he doesn't buy more things
here in Morocco and he says he tries
yeah it's better margins and there's
less taxes and paperwork if he can just
buy it here in Morocco he just hasn't been
able to find the reliability and the
quality that he's looking for when it
comes to his brand yeah I mean you and I
have talked about this several times how
important brand is to owners yeah and
how they they will not compromise brand
and they are very sensitive about their
brand sometimes to the point of being
too timid hmm and trying new things and
yeah having a bias for action
they'll actually hesitate to do things
because they're concerned about
preserving their brand and he's the same
way he doesn't want to sell junk right
and he doesn't want to make promises to
retailers about quality and quantity if
he can't deliver it unfortunately he said
he just hasn't been able to find it so
this actually transitions well into our
discussion for today which is the
advantages and opportunities of becoming
an auto entrepreneur if you can
manufacture or you can find
manufacturers and be an intermediary for
them and you can get your hands on good
merchandise at a reasonable price and a
reliable quality and deliver it in
time you can find people to buy it hmm
especially when it comes to handcrafted
items that are made in Morocco ceramics
leather goods carpets rugs other kinds
of things that are manufactured here he
said that he's tried in the past to work
with some of these cooperatives and
other things and he says the first 10
that you get are fantastic right yeah
the problem is number 11 through 100
it's the consistency and so that is a
huge opportunity here in Morocco if you
can figure out a way to have reliable
products that is up to code up to
standard of quality you can make money
you can find people who
buy your stuff and then they will resell
it yeah my wife's business has some
experience in this area and I've joined
her on trips to Marrakesh we visited
several different tanneries and leather
factories and gave them a prototype of
what we wanted asked them to submit their you know their models and came back and
huge huge range of quality and how
accurately they matched the prototype
for what we were looking for but even
then even if you get somebody who
matches it there's a risk because when
you say okay I'll take 200 of them or
I'll take 2,000 of them you want them
all to look like that prototype that you
approved but it's the consistent quality
that is difficult to to really
monitor and make sure that it's...to
assure that it's maintained before we
get into some more details about
specific activities for auto
entrepreneurs let's just talk a little
bit about what it is an auto
entrepreneur is a legal designation of
an independent business it is a sole
proprietor it is an independent worker
so one person one person you cannot have
employees and you cannot have multiple
people working under the same status
being auto entrepreneur gives you a tax
status meaning you can report your
earnings and your expenses your revenue
and expenses and your net income through
the auto entrepreneur system and it's
relatively easy you do it once a quarter
but it keeps you legal which if anyone
is going to grow a significant business
here in Morocco that is going to pay for
your lifestyle a home a car you need to
have a legal status because at some
point you're going to grow big enough
that the authorities will become aware
of you and then they'll shut you down or
they'll hit you with a huge tax
bill and they'll take all your money
this happens all the time yeah
the other status it gives you is the
ability to invoice meaning if you do
work for a company
who wants to expense your work put it on
their expenses and deduct it from their
revenue to pay less taxes you have the
ability to do that legally it's
relatively easy to sign up you print out
a few forms online you fill them out and
you submit them to there are hundreds of
locations where you can submit the
papers almost every bank branch in the
major cities will accept them or you can
just go to the post office and submit
the papers and I've heard that you get
your card back in anywhere from two to
six weeks okay Wow let's talk a little
bit about the types of activities that
you can do as an auto entrepreneur
because you can't do everything it's a specific status as we mentioned
it's not for companies that are dealing
in licensed work for example a medical
doctor a lawyer an accountant things
that require permits and licensing and
certifications they're not authorized
right under auto entrepreneur but Ryan
you saw the lists talk a little bit
about what types of activities can be
done as an entrepreneur yeah so just
to put this out there we'll put the
link to this website but we're
looking at AE.gov.MA and there's
great information on there there's a lot
of opportunities to fabricate things so
you're creating some products
whether it's edible or something you
know physical made of different natural
materials and there's a lot of different
types of business related to fruit and
vegetables paper magazines audio video
materials of telecommunication just
there's the general one of just selling
via the internet which is tremendous you
can sell your products digital products
online you can access the global market
a couple billion customers available and
you can do that legally as an auto
entrepreneur here yeah in general just
so our audience understands
you can sell almost anything now you
can't sell airplanes and helicopters and
buildings and houses that's a protected
class of sales but almost any food item
almost any finished good furniture
clothing electronics crafts housewares
you can sell all of that stuff you can
also manufacture all of that stuff so as
an auto entrepreneur if you're selling
food you can sell up to half a million
dirhams per year as an auto entrepreneur
some other things you can do private
security artist designer disc jockey DJ
if you were a DJ for parties you can be
an auto entrepreneur and you can charge
clients and give them an invoice for
being the the leader of a party the disc
jockey for a party you can be a tourist
guide we mentioned this before about
taking photographs you can be a
photographer so your idea about sitting
in the middle of a river and taking
pictures of people coming down in rafts
or canoes you can do that as an auto
entrepreneur yeah taxi driver language
tutor construction worker doing things
like painting carpentry landscaping
welding you can do that as an auto
entrepreneur and I'm sure that there are
actually job opportunities at some of
these construction sites around Morocco
that if you become an expert in welding
or you become an expert in plumbing
or electrical work you can be a
subcontractor now just be careful
make sure you get paid because there are
a lot of stories about especially in
construction people doing work and then
never getting paid yeah so make sure
you're working with someone who's honest
and reliable yeah the last one I want to
mention in terms of activities is the
idea that that you brought up Ryan
regarding Airbnb whether it's renting
out space or providing advice
to Airbnb hosts who are renting you can
do that as an auto entrepreneur yeah and
then the last one is it specifically
says I want to
make sure that I get it correct it says
conseil pour les affaires et autres conseils de
gestion.that can mean almost
anything right like that term consultant
right it's pretty broad conseiller d'affaires.that means almost anything so if you're
helping someone in any way and giving
them advice and you're helping them run
their business you can be an auto
entrepreneur and have that status it's
totally legal and you're eligible to do
it recognize that you can always find
people in Morocco that will work under
the table they'll work for cash there's
lots of people willing to do that but
there's also people that are not willing
to hire somebody for cash they want a
receipt they want to follow the legal
process they want to invoice those
expenses they want to write them off and
so you can attract those types of
clients and if you're working with
people overseas like with the Airbnb
hosting that we talked about people that
are from France or from the UK and they
have properties here in Morocco they may
be a lot more comfortable with you as a
legitimate business in the eyes of the
Moroccan government sending them
invoices rather than just cash in hand
because the countries that they're
coming from
that's very poor business practice and
it rarely happens and it can be very
have a very high consequences so their
comfort level would be much higher
dealing with somebody who had legal
status for the work they were doing so
that leads into the next aspect that I
want to talk about which is the
advantages of being an auto entrepreneur
you mentioned companies not wanting to
hire somebody in the black market or
under the table and that's me I'm not
going to hire anyone to do any work
under the table they have to be an auto
entrepreneur or a proper employee in
order for me to work with them as
I think about furnishing my office
buying everything that I need for my
office I plan on doing a mix of things
some new things some used things but what
I do know is that there are a lot of
businesses that are not going to give me
a proper invoice let's say I go
and have
a couch or a table manufactured it's
unlikely I'm going to get an invoice
that has all the proper documentation
that I need to use it to deduct for my
taxes mm-hmm so here's a business idea
for our listeners if you are an auto
entrepreneur in Morocco and you're
engaged in sales the taxes you're going
to pay on those sales is 1% so it's not
exactly important for you to have a lot
of expenses to deduct meaning if you
deduct a ton of expenses from your
revenue it's not actually going to save
you that much money because your tax is
only 1% so here's a business model for
our listeners you can be an intermediary
between businesses and the black market
meaning you go to folks who are
manufacturing clothing and furniture and
equipment you buy it from them and then
you resell it to the companies that want
the stuff and you add a markup and you
give them a receipt so they're buying it
and then they can deduct their expense
from you and you'll claim that
revenue on your taxes and you'll pay 1%
but can you claim your expenses of the
original purchase?No you can't because
you're buying it from an entity that is
not legitimate however it
doesn't really matter because you're the
tax on your revenue or on your net
income is only 1% anyways right here's
my point
let's say for example you buy two
hundred thousand dirhams worth of
furniture and then you resell it to a company for four
hundred thousand dirhams because you
bought it on the black market you won't
be able to deduct anything but you will
have to pay one percent tax on that four
hundred thousand right which is four
thousand dirhams.however we
know that you made 200 thousand so that
leaves 196 thousand dirhams of profit
right so it's not incredibly
important that you deduct what you
spent on the black market as an auto
entrepreneur yeah but for a business
that's paying twenty twenty five percent
thirty percent thirty five percent taxes
that's a much bigger deal right they're
very motivated to be able to invoice
their expenses they yes they've got to
be able to write it off so you if you
approach a business that typically just
sells for cash they operate in the black
market and you say are there clients
that have walked away from you because
you couldn't invoice them?I can work out
a deal with you where we can bill those
clients through my business and I can
even give you a kickback so it's worth
your while you approach there's nothing
really to lose for those business owners
it increases their opportunities to make
sales right and what the tax
system has the effect of doing is
pushing all these big businesses to buy
all their stuff from other big companies
like Kitea and IKEA and Carrefour and
Marjane and these big businesses where
they'll get the receipt that they know
they can deduct on their taxes and it
has the effect of sort of hurting the
smaller business owner so you can be the
intermediary between some of the big
businesses that may want locally
produced items but because they know
they're not going to get a proper
invoice or a proper facture they don't
even go and buy the stuff from them
right so that's just one idea this
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we get it now back to the show some
other advantages of the auto
entrepreneurs it's easy to sign up you
can work from home you don't need an
office space it can be your home address
that is linked to the auto
entrepreneur card you can work in cafes
or co-working spaces for at least the
first year there's no tax on revenue
meaning it's just net income so if you
don't actually make any net income in
the first year you don't pay any tax at
the other last major advantage is that
there there's no TVA.no tax value
added yeah so you are inherently 20%
cheaper than your nearest competitor
yeah it's amazing you can basically go to any company and say I'll
work for you and oh by the way there's
no TVA which can be attractive to a
lot of companies who are used to paying
it it could be the reason that they
decide to use you instead of someone
else yeah now recognize that a lot of
the world is shifting towards a gig
economy where companies rather than
hiring somebody that is permanently
employed by them they just subcontract
out work as needed things that may not
be needs that they have consistently
they might just hire one-off graphic
design programming some data analysis
things that they they don't want to
bring somebody in-house and hire as a
permanent employee but they still need
it from time to time in their business
there's an opportunity to be a
freelancer and the auto entrepreneur
allows you to work with big companies
that need to do it legally
a lot of people desire to graduate from
university and get a job working at a
big company and have a real secure
salary and kind of a clear pathway
towards growing their career but if
you're a person that desires to earn a
lot of wealth you would like to earn
significant wealth you dream of becoming
a millionaire you really cannot do that
working for a company you have got to
become an auto entrepreneur you have to
start your own business but that can be
risky that that can involve a lot of
capital or a season where you're not
earning any revenue and if you've
already got a family and other
commitments that's a huge risk
however becoming an auto entrepreneur is
allowed even if you have a full-time job
so this gives you the opportunity to
grow a business on the side while still
keeping your secured salary your secure
paycheck so it's known as a side hustle
you can be upskilling you can be
developing your abilities adding value
to what you can offer even in your
career into your company or you can be
growing a business because you hope to
eventually transition to that being your
full-time job so this is an excellent
option even for somebody that's thinking
I don't want to do this full-time at
this point but I'd like to make my side
hustle something that's legal yeah I
think the future of business for many
people and not only in Morocco but
around the world is as independent
workers the ability to work flexibly to
work for multiple employers or clients
at the same time the ability to work
from anywhere
meaning reducing the costs of having
office space being able to work from
home or work remotely specifically for
auto entrepreneur the lower tax rates
the exemption from TVA
the other reason I think it's the future
is because it avoids a lot of the
obstacles that there are to doing
business right now
labor laws are an extreme obstacle to
doing business and companies just aren't
hiring as many people as they would if
the labor laws were better and so I
think more and more work is going to
shift into this independent community
and companies are going to use
independent workers to do a lot of the
work that they need to get done because
it's lower risk and there's a better
return on their money yeah
also when you talk about health care
CNSS this is true in morocco in the united
states and europe as well the health
care costs continue to go up and having
employees just increases the cost of
having health care within the
organization the business that you're
contracting with they don't have to
worry about that you are your own entity
you're your own business and you take
care of your own health care and for
them it makes it easier to do business
with you so that's why I think that the
future of work is going to shift into
this independent status now that may be
the case but there are still some
limitations on the program we mentioned
before 500 thousand dirhams if you're
doing sales or production or artisanal
two hundred thousand dirhams per year
limit for services so if you're a
photographer or a designer or an advisor
there's a two hundred thousand dirham
limit but if you reach that limit then
you it's a good problem to have and
you're ready to to start a proper
entreprise yeah that's right.Proper company and what about exporting and importing
that's also restricted is it not yeah
there are protected categories you
cannot import or export you cannot
change money you cannot be an architect
or a doctor or a lawyer none of those jobs that need professional
certifications so when we talk about
selling natural products wood products
furniture fruit vegetables as an auto
entrepreneur we're talking about selling
it within Morocco selling it to other
Moroccan companies right I guess to
summarize this is an exciting initiative
by the Moroccan government and it's a
really strong move to alleviate the high
rate of unemployment particularly for
young people with technical skills
or who can work part-time doing all
these activities that we've already
listed so it's exciting to see Morocco
moving in that direction and I hope our
listeners will really strongly consider
this and take advantage of this window
of opportunity yeah at this point I see
no downside it only gives you more
opportunity if any of our listeners try
this out any of the ideas that we're
sharing we'd love to hear feedback and
so drop us an email Ryan@Moroccopodcast.com let us know about your
experience and we'll share that with our
audience you've been listening to the
business in Morocco podcast my name is
Ryan Kirk here with my co-host Ryan
Maimone.if you enjoyed this episode be
sure to subscribe and leave us a 5-star
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theme music is lovely day by Bill
used under Creative Commons and we hope you'll have a lovely day doing business
in Morocco we'll see you next time

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